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Stuff revenue on the slide, ASX update reveals

Stuff’s parent company – the Australia-based Fairfax Media – has revealed the 2018 financial year-to-date revenue of its New Zealand subsidiary is down 7% on last year.

In a trading update to the ASX, the company also reported its overall group revenues are 4-5% below the 2017 financial year for the first 12 weeks of the new financial year.

The update was made ahead of the expected lodgement of the Domain Separation Scheme Booklet later today.

Domain is Fairfax’s Australian real-estate listings business, which is enjoying a 22% increase in digital revenue and a 13% lift in overall revenue – although its costs are tipped to increase by 13% over last year’s $A206 million.

The update to the ASX appears to have taken Stuff personnel by surprise, with those executives NBR approached about it initially assuming the query was about the company’s 2017 financial year results, which were released last month.

NBR approached Fairfax Media over Stuff’s reported fall in revenue (it is apparently company policy for any comment on financial results to be made by the Australian parent company), but spokesman Brad Hatch replied that “Due to our market disclosure requirements, we aren't in a position to make further comment beyond what we have set out in the trading update.”

For the record, the questions asked were:

Is Stuff’s 2018 financial year year-to-date revenue being down 7% on last year a surprise?

2018 financial year is but a pup – is Fairfax anticipating a lift in Stuff’s revenue during the remaining 40 weeks?

Which of Stuff’s divisions experienced the revenue declines? Can you provide percentages?

What if any of Stuff’s divisions enjoyed lifts in revenue?

Does this decline suggest Stuff’s strategy requires tweaking or complete overhaul or is it fundamentally directionally correct?

What are the cost-saving measures Fairfax intends to implement with Stuff? Are these measures likely to include a reduction in headcount and/or the closure of the print editions of New Zealand newspapers?

This trading update is made ahead of the expected formal commencement of the Scheme process and will replace the usual disclosure provided at the Company’s Annual General Meeting (AGM). The 2017 AGM will be held on 2 November 2017.

Trading Update

FY18 year-to-date overall group revenues are 4% to 5% below last year. Across our reporting segments:

Domain digital revenue growth is 22% and total revenue growth is 13%.

Metro Media is down around 11%.

Australian Community Media is down around 10%.

Stuff (New Zealand Media) is down around 10% including currency impact (down around 7% in local currency NZ$).

Macquarie Media is down around 4% (down 1% on a continuing business basis excluding the impact of disposals).

For FY18, Domain’s costs are expected to increase approximately 13% from FY17’s $206 million (10% like for like excluding acquisitions), excluding any separation-related costs and adjustments.

Across the Fairfax Group we continue to implement cost savings measures.

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